THIS DOCUMENT IS IMPORTANT. If you are in any doubt about the

132 Pages·2006·3.37 MB·English

THIS DOCUMENT IS IMPORTANT. If you are in any doubt about the contents of this document you should consult your
stockbroker,bank manager,accountant,solicitor or other independent professional adviser (being,if you are in the United Kingdom,
an adviser authorised under the Financial Services and Markets Act 2000) who specialises in advising on the acquisition of shares and
other securities,before taking any action.Your attention is also drawn to the section headed “Risk Factors” in Part II of this document.
This document constitutes an admission document and has been prepared in accordance with the AIM Rules. This document does not
constitute a prospectus for the purposes of sections 85 and 87 of FSMA and any offer to the public is exempt by virtue of section 86 of FSMA.
Acopy of this document has been delivered to the London Stock Exchange as an admission document in respect of the Shares. This document
has been approved for issue in the United Kingdom as a financial promotion for the purposes of Section 21 of FSMA by King & Shaxson
Capital Limited, which is authorised and regulated by the Financial Services Authority.
The Company and the Directors, whose names appear on page 3, accept responsibility for the information contained in this document. To the
best of the knowledge of the Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this
document is in accordance with the facts and contains no omission likely to affect the import of such information.
Application will be made for the Shares,issued and to be issued,to be admitted to trading on AIM.AIM is a market designed primarily
for emerging or smaller companies to which a higher investment risk than that associated with established companies tends to be
attached.AIM securities are not admitted to the Official List of the United Kingdom Listing Authority.A prospective investor should
be aware of the potential risks in investing in such companies and should make the decision to invest only after careful consideration
and consultation with his or her own independent financial adviser.The rules of AIM are less demanding than those of the Official
List.It is emphasised that no application is being made for admission of these securities to the Official List.
Further,the London Stock Exchange plc has not itself approved the contents of this document.It is anticipated that Admission will
become effective and trading in the Shares will commence on AIM on 21 December 2006.
Walcom Group Limited
(Incorporated in the British Virgin Islands with limited liability with IBC number 584063)
(ISIN No.VGG574851074)
Placing of 4,491,735 Shares at 35 pence per Share
and
Admission to trading on AIM
Nominated Adviser Broker
John East & Partners Limited King & Shaxson Capital Limited
The following table shows the authorised and issued share capital of the Companyimmediatelyfollowing the Placing.
Authorised Issued and fully paid
HK$ Number HK$ Number
1,500,000 150,000,000 Shares of HK$0.01 each 649,108.91 64,910,891
The Placing Shares rank pari passuin all respects, including the right to receive all dividends and other distributions declared, made or paid
on the Shares after the date of this document.
This document constitutes an admission document in accordance with the rules of the AIM market of the London Stock Exchange.
John East & Partners Limited, which is authorised and regulated by the Financial Services Authority, is acting as Nominated Adviser to
Walcom Group Limited. John East & Partners Limited is not acting for anyone else and will not be responsible to anyone other than Walcom
Group Limited for providing the protections afforded to clients of John East & Partners Limited or for providing advice in relation to the
contents of this document and the admission of the Shares to trading on AIM.
King & Shaxson Capital Limited, which is authorised and regulated by the Financial Services Authority, is acting as Broker to Walcom Group
Limited. King & Shaxson Capital Limited is not acting for anyone else and will not be responsible to anyone other than Walcom Group Limited
for providing the protections afforded to clients of King & Shaxson Capital Limited or for providing advice in relation to the contents of this
document and the admission of the Shares to trading on AIM.
In particular, John East & Partners Limited, as Nominated Adviser to the Company, and King & Shaxson Capital Limited, as Broker to the
Company,owe certain responsibilities to the London Stock Exchange which are not owed to the Company or the Directors or to any other
person in respect of his or her decision to acquire Shares in reliance on any part of this document.
No liability is accepted by John East & Partners Limited or King & Shaxson Capital Limited for the accuracy of any information or opinions
contained in or for the omission of any material information from this document, for which the Company and its Directors are solely responsible.
The Shares havenot been and will not be registered under the securities legislation of any province or territory of Australia, Canada, Japan,
South Africa or USA.
Accordingly, the Shares may not, subject to certain exceptions, be offered or sold, directly or indirectly in or into Australia, Canada, Japan,
South Africa or USA, or to any national, citizen or resident of Australia, Canada, Japan, South Africa or USA. This document does not
constitute an offer to sell or issue, or the solicitation of an offer to buy or subscribe for, Shares in any jurisdiction or to any person in which
orto whom such offer or solicitation is unlawful.
Prospective investors are advised to read,in particular,Part I “Information on the Company” and Part II “Risk Factors”,for a more
complete discussion of the factors that could affect the Company’s future performance and the industry in which it operates.
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Contents
Page
Directors,secretary and advisers 3
Definitions 4
Glossary of terms 7
Expected timetable of principal events 8
Placing statistics 8
PART I Information on the Group 9
History and background 9
Walcom’s business 9
Marketing strategy 10
Intellectual property 11
Competition 11
Summary financial information 12
Current trading 12
Directors and senior management 12
Employees 15
Details of and reasons for the Placing and use of the proceeds 15
Dealing restrictions 15
Share Option Scheme 15
Share Award Plan 16
Warrants 16
Taxation 16
CREST 16
Corporate governance 16
Dividend policy 17
Additional information 17
PART II Risk factors 18
PART III Competent Person’s Report 23
PART IV Financial information on the Company 74
Section A: Financial Information on the Company 75
Section B: Accountants’Report on the Company 98
Section C: Unaudited Interim Financial Information for the
six months ended 30 June 2006 100
PARTV Unaudited pro-forma statement of net assets of the Group 104
Section A: Unaudited pro-forma statement of net assets of the Group 104
Section B: Accountants’Report on the unaudited pro-forma
statement of net assets of the Group 105
PART VI Additional information 107
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Directors, secretary and advisers
Directors
Eddie Kin Man Chan (Non-Executive Chairman)
Francis Chi (Chief Executive Officer)
Yong Chian Tan (Chief Executive Officer in the PRC)
Albert Siu Fai Wong (Chief Financial Officer)
Frankie Yuet Leung Wong (Non-Executive Director)
Royston Frederick Drucker (Non-Executive Director)
Timothy Robert Nelson (Non-Executive Director)
all of:
Unit 613, 6/F West Wing Office Building, New World Centre, 20 Salisbury Road,
Tsimshatsui, Kowloon, Hong Kong
Company Secretary Principal Place of Business
Albert Siu Fai Wong FCCA CPA Unit 613, 6/F West Wing Office Building,
New World Centre, 20 Salisbury Road
Tsimshatsui, Kowloon, Hong Kong
Nominated Adviser Broker
John East & Partners Limited King & Shaxson Capital Limited
Crystal Gate, 28-30 Worship Street, 6th Floor, Candlewick House,
London EC2A 2AH 120 Cannon Street, London EC4N 6AS
Solicitors to the Nominated Adviser and Broker
Faegre&Benson LLP
7Pilgrim Street, and Shanghai Centre, Suite 425,
London EC4V 6LB 1376 Nanjing Road West,
Shanghai 200040, China
Solicitors to the Company
As to Hong Kong law As to English law
Richards Butler Richards Butler LLP
20F Alexandra House, 16-20 Chater Road, Beaufort House, 15 St Botolph Street,
Central, Hong Kong London EC3A 7EE
As to Chinese law As to British Virgin Islands law
Fangda Partners Maples & Calder
20/F Kerry Centre, 1515 Nanjing Road West, 1504 One International Finance Centre,
Shanghai 200040, China 1Harbour View Street, Hong Kong
Auditors Reporting Accountants
Chu and Chu Certified Public Accountants Baker Tilly
Suite 2302-7, ING Tower, 2 Bloomsbury Street, London WC1B 3ST
308 Des Voeux Road and
Central, Hong Kong Baker Tilly Hong Kong
12th Floor, China Merchants Tower
Shun Tak Centre, 168-200 Connaught Road
Central, Hong Kong
Registrars Depositary
Computershare Investor Services Computershare Investor Services PLC
(Channel Islands) Limited POBox82, The Pavilions,
POBox 83, Ordinance House, Bridgewater Road,
31 Pier Road, St Helier, Bristol BS99 7NH
Jersey JE4 8PW, Channel Islands
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Definitions
The following definitions apply throughout this document unless the context requires otherwise:
“Admission” the admission of the Shares to trading on AIM in
accordance with the AIM Rules
“AIM” the AIM market of the London Stock Exchange
“AIM Rules” the rules for AIM companies as published by the London
Stock Exchange
“Bioglory” Bioglory International Limited
“Board” or “Directors” the directors of the Company whose names are set out on
page 3 of this document
“BVI” the British Virgin Islands
“Capitalisation” the capitalisation of certain sums standing to the credit of
the share premium account of the Company further details
of which are contained in paragraph 3 of Part VI of this
document
“Committee” acommittee delegated from time to time by the Board
“Company” or “Walcom” Walcom Group Limited, a company incorporated in the
BVI with limited liability on 2 March 2004
“Companies Act” the BVI Business Companies Act (No. 16 of 2004)
“Companies Ordinance” the Companies Ordinance (Chapter 32 of the Laws of
Hong Kong)
“Computershare” Computershare Investor Services PLC
“Corporate Governance the Corporate Governance Guidelines for AIM Companies
Guidelines” published by the Quoted Companies Alliance in July 2005
“CREST” the computerised settlement system to facilitate the
transfer of title of shares in uncertificated form, operated
by CRESTCo Limited
“CREST Regulations” the Uncertificated Securities Regulations 2001 of the UK
(as amended)
“Donor” aperson or organisation which allocates cash or gift shares
to the Trustee pursuant to the Share Award Plan Rules
“Enlarged Issued Share Capital” the Shares in issue immediately following Admission
“EU” the European Union
“Group” the Company and its subsidiaries or any of them or, where
the context requires in respect of the period before the
Company became the holding company of its present
Subsidiaries, the present Subsidiaries of the Company
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Definitions
(continued)
“HK dollars” or “HK$” Hong Kong dollars and cents respectively, the lawful
and “cents” currency of Hong Kong
“HKSE” Hong Kong Stock Exchange
“Hong Kong” the Hong Kong Special Administrative Region of the PRC
“John East & Partners” John East & Partners Limited
“King & Shaxson Capital” King & Shaxson Capital Limited
“Leadton” Leadton Resources Limited
“London Stock Exchange” London Stock Exchange plc
“Longain” Longain Trading Limited
“Omega” Omega-BioPharma Holdings Limited
“Options” or “Share Options” options to subscribe for new Shares under the Share Option
Scheme
“Placing” the placing of the Placing Shares at the Placing Price
“Placing Price” 35 pence per Placing Share
“Placing Shares” the 4,491,735 new Shares being offered by the Company
for subscription under the Placing
“PRC” or “China” the People’s Republic of China, and except where the
context requires, references in this document to the PRC or
China do not include Hong Kong, the Macau Special
Administrative Region of the PRC and Taiwan
“R&D” Research and Development
“Renminbi” or “RMB” Renminbi, the lawful currency of the PRC
“Share Award Plan” the share award plan adopted by the Company on
20 September 2006, the principal terms of which are
summarised in paragraph 12 of Part VI of this document
“Share Award Plan Rules” the rules accompanying the Share Award Plan
“Shareholders” the holders of Shares
“Shares” shares of HK$0.01 each in the capital of the Company
“ShareOption Scheme” the Company’s 2006 unapproved executive share option
scheme rules adopted by the Company on 20 September
2006, the principal terms of which are summarised in
paragraph 11 of Part VI of this document
“Takeover Code” The City Code on Takeovers and Mergers of the UK as
amended from time to time
“Trust Deed” in relation to the Share Award Plan, the trust deed entered
into between (1) the Company and (2) the Trustee
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Definitions
(continued)
“Trustee” the trustee of the Share Award Plan, being Walcom China
Staff Incentive Limited
“UK” the United Kingdom of Great Britain and Northern
Ireland
“UKLA” the UK Listing Authority, being the Financial Services
Authority acting in its capacity as the competent authority
for the purposes of the UK Financial Services and Markets
Act, 2000
“USA” the United States of America
“Vuna” Vuna Capital Partners Limited
“Walcom International” Walcom International Limited, a company incorporated in
the BVI on 20 March 2001 and a wholly-owned subsidiary
of the Company
“Walcom Shanghai” Shanghai Walcom Bio-Chemicals Industrial Limited
“Warrantholder” in relation to a Warrant, the person in whose name such
Warrant is registered in the register of Warrantholders for
the time being
“Warrants” The warrants to subscribe for Shares issued pursuant to a
deed,described on page 16 of PartIof this document and
asummary of which is set out in paragraph 13 of Part VI
“US dollars” or “US$” United States dollars, the lawful currency of the USA
“£” pounds sterling, the lawful currencyof the UK
On 14 December 2006 the last practical date before printing this document, the rate of exchange
was approximately HK$1 = £0.0655.
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Glossary of terms
The following definitions apply throughout this document unless the context requires otherwise:
“aquaculture” the cultivation of the natural produce of water, such as
fish, crustaceans and molluscs
“Aquanin” an aquaculture growth promotant
“Avianin” apoultry growth promotant
“Beta-agonist” beta-adrenergic agonists, a group of synthetic
phenethanalomine derivatives that act as growth-modifying
agents
“Bovinin” abeef cattle growth promotant
“Cysteamine” acomponent of Co-enzyme A which is a natural metabolite
generated in animals’ bodies and which participates in
animals’ physiological Growth Axis to stimulate the
animal’s natural GH level
“Eggronin” an egg laying rate promotant that also reduces egg shell
breakage
“exogenous” developed or originating outside the organism
“finisher” livestock bred for meat which is in the last few weeks of
growth before being taken to market
“GH” Growth Hormone, a protein secreted by the anterior
pituitary gland in all mammals although its structure
differs between species. It is a major participant in control
of several complex physiological processes, including
growth and metabolism
“Lactonin” adairycow milk production promotant
“metabolite” any substance produced by metabolism or by a metabolic
process
“polyclonal” derived from different types of cells
“Porcinin” aswine growth promotant
“titer”or “antibodytiter” a measurement of the amount of antibodies in the blood.
The test to measure antibodies is usually performed by
making a number of dilutions of the blood then measuring
at which dilution there are sufficient antibodies to react to
that test
“Walstrong” a proprietary technology relating to the Cysteamine
complexthat retains the essential features of Cysteamine in
an animal’s physiology, yet which is stable when subjected
to prolonged storage and industrial processing. Formerly
known as CT2000
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Expected timetable of principal events
Publication date of this document 15 December 2006
Admission and commencement of dealings on AIM and
crediting of CREST accounts 21 December 2006
Share certificates in respect of Placing Shares expected to
be despatched by no later than 29 December 2006
Placing statistics
Placing Price 35 pence
Number of Placing Shares 4,491,735
Number of Shares in issue immediately following the Placing 64,910,891
Percentage of Enlarged Issued Share Capital being placed
by the Company 6.92 per cent.
Amount being raised under the Placing for the Company
(before expenses) £1.57 million
Estimated net proceeds of the Placing receivable
by the Company £1.01 million
Market capitalisation at the Placing Price at Admission £22.72 million
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PART I
Information on the Group
History and background
The Group is actively engaged in the research, development, commercialisation, production and
marketing of animal feed additives. The Group’s feed additives improve the health of the animals,
reduce mortality rates, shorten the time taken to reach maturity, increase the protein content in animal
food products, increase egg laying and reduce eggshell breakage and build resistance to disease.
The Group has developed technology which stimulates an animal’s natural physiological systems,
without the undesirable side effects commonly associated with hormones, Beta-agonists and
antibiotics. The Directors believe that the Company is the only animal science company to have
developed a “non hormonal”, “non antibiotic”, “non gene-altering” physiological regulation animal
feed additive and the only animal science company to have commercially launched a full range of
products in that sector. The Group is headquartered in Hong Kong with a research and manufacturing
facility in Shanghai.
Based on the discovery of the positive effect of Cysteamine, a natural metabolite existing in plants and
animals, on animal health and productivity, the Group originally directed its research efforts towards
stabilising Cysteamine, a naturally unstable compound, for commercial use in animal feed products. The
Group has successfully developed Walstrong, a patented and proprietary Cysteamine compound, which
retains the essential effects of Cysteamine in a way which is stable when subjected to prolonged storage
and industrial processing.
Walstrong, which is not a hormone, assists an animal to increase secretion of its own Growth Hormone,
to enhance growth and general well-being of animals. GH injection is a popular treatment in the US.
However, as it is administered by injection it also raises concerns about possibly harmful residues which
might be left behind by an externally introduced GH. Walstrong is an attractive alternative in that it is
in powder/granule form and can be easily administered as a feed additive.
Walcom’s business
Product Range
The Group has successfully produced a series of animal health and productivity enhancing products. At
present, the Group has commercialised products which can be used to enhance productivity in swine
(Porcinin) and broilers (Avianin), increase the yield and quality of milk (Lactonin) and promote higher
laying and lower egg shell breakage ratios (Eggronin).
The Group develops its Walstrong compound into feed additive and feed additive premix. Feed additive
is the basic raw product to which buyers are able to add other vitamins before mixing with their
stockfeeds (i.e. corn). Feed additive premix includes a dosage of vitamins which can be mixed directly
into stockfeeds. Feed additive premix is more attractive to smaller farmers who do not have the
knowledge or resources to add other products. Feed additive is attractive to feed integrators who prefer
to mix all their own raw ingredients.
The Directors believe that the Group’s products have a positive effect on the cost of animal husbandry.
Based on trial evidence, the Directors have found that Porcinin and Avianin increase the average weight
gain of swine and broilers by up to 14.3 per cent. and 17.8 per cent. respectively over a trial period of
54 and 43 days, respectively. Further trials have demonstrated that Porcinin can increase the lean meat
percentage of swine by up to 4.6 per cent., Avianin can increase the breast yield of broilers by up to 6.3
per cent., Eggronin can improve the egg laying rate by up to 11.1 per cent. and reduce breakage by up
to 49 per cent. and Lactonin can improve milk production by up to 4.9 per cent. whilst increasing the
protein content of milk by up to 3.9 per cent. Two new products, Aquanin and Bovinin, are not currently
being marketed.
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